Letter to Mayor Adams Regarding Mining and Use of Cryptocurrencies in New York City

Hon. Eric Adams
Mayor of the City of New York
City Hall
New York, NY 10007

Re:      Mining and Use of Cryptocurrencies in New York City

Dear Mayor Adams,

We write on behalf of the New York City Bar Association’s Energy and Environmental Law Committees. These Committees are active groups of attorneys and law students interested in energy and environmental law and policy at the federal, state, and local level. The Committees’ work includes researching and weighing in on important issues that have clear implications for energy or the environment. One of those issues is what the mining and use of cryptocurrencies in New York City means for the energy system and the environment.

Our focus here relates to the City’s ongoing role in combating climate change and enabling a green economy by, among other things, implementing existing building decarbonization laws and strengthening the City’s resilience to extreme weather. As you recently noted, “we are in the midst of a climate crisis.”^[1] To keep New York City at the forefront of vital efforts to address the causes and effects of climate change, we urge you to ensure that the institutions and practices that will establish New York City as the “center of the cryptocurrency industry”^[2] are developed on a sustainable foundation. This letter therefore focuses on the energy and environmental aspects of cryptocurrency, and proposes an environmental baseline for New York City’s engagement with cryptocurrency. We appreciate the potential benefits of cryptocurrency such as improving financial and tech literacy and attracting tech companies and investments to the City, but we encourage you to use New York’s sweeping legislative commitment to decarbonization as a framework for your administration’s engagement with cryptocurrency.

Mining and transacting in many cryptocurrencies is an energy-intensive, high-emissions operation. Consider Bitcoin, arguably the flagship of cryptocurrencies: some studies show that a single Bitcoin transaction uses as much as 2203.05 kWh, equivalent to the power consumption of an average U.S. household over 75.51 days.^[3] To put that in perspective, Bitcoin mining consumes as much energy and pumps out as much greenhouse gases as entire nations.^[4] And Bitcoin is just one of thousands of currencies whose mining, by design, consumes large amounts of energy, which in turn yields harmful emissions. Currently, non-renewable fuels comprise nearly 61% of the power used by crypto mining facilities.^[5] And that percentage seems poised to rise, as the energy demand for crypto mining is leading to efforts to resurrect mothballed fossil fuel-burning power plants and industrial facilities in New York State.^[6] This is a step backward, away from the State’s mission to phase out fossil fuel use and reduce greenhouse gas emissions.

Some have suggested that renewables and energy credits could be used to make crypto mining more sustainable. However, to the knowledge of our members, businesses developing and operating mining facilities seek the least expensive power sources and have scant interest in renewable technologies—unless these can be provided on a 24/7 basis and offer the most favorable prices. Furthermore, although some crypto mining facilities in New York run on hydroelectric power, this diverts those renewable energy resources from serving other sources of demand for power. This, in turn, causes greenhouse gas-emitting resources to ramp up when they otherwise would not have done so. In addition to its contributions to emissions, crypto’s energy consumption is also likely to increase energy costs—not only for crypto users but for all energy consumers, regardless of whether they use cryptocurrencies. In short, as it currently stands, increased use of crypto seems likely to work against the City’s goals for affordability and climate policy, including the goal to achieve carbon neutrality by 2050.^[7]

Apart from energy consumption and costs, crypto mining also has negative impacts on the water and air resources and the communities that rely on them. For example, crypto miners use local cold waterways to cool their computing systems and then discharge that same water back at temperatures as high as 98 degrees Fahrenheit (and higher). This warmed water not only kills fish directly but also promotes algal blooms which deprive aquatic life of oxygen, harming ecosystems already stressed by a changing climate. As for air pollution, fossil fuel-burning power plants supporting crypto mining release local air pollutants such as particulate matter and nitrous oxides that threaten air quality in downwind communities. These pollutants are linked to negative health impacts including cardiovascular and respiratory diseases, and disproportionately harm Black and brown communities.^[8]

We recognize that ambitions for cryptocurrency in New York City involve more than mining, and that relatively high energy prices here make it an unlikely place for extensive mining operations. But this does not wholly decouple crypto activities in the city from the mining activities that enable them. We also understand that some alternatives to Bitcoin use a proof-of-stake approach that consumes far less energy than the proof-of-work approach employed by Bitcoin.^[9] However, these alternatives are far less popular than Bitcoin.^[10] Ethereum, another highly popular cryptocurrency, has said that it aims to transition to a proof-of-stake approach.^[11] However, Ethereum first announced that aim before the start of the Trump Administration and has yet to fully migrate from a proof-of-work approach.^[12]

We urge your administration to consider the numerous environmental, social, and health impacts associated with cryptocurrency mining as you craft your policy agenda.^[13] And, with those impacts in mind, we ask that your administration commit to the following measures:

• Ensure that cryptocurrency growth and use are consistent with the mandates and goals of the City’s climate change laws and policies.
• Support a requirement that the power consumption of facilities engaged in crypto mining be matched by renewable energy generation developed or financed by the facility owners/financiers, including with sufficient storage capacity to power the crypto mining hardware at all times.^[14]
• Advocate for blockchains that use a less energy-intensive proof-of-stake method for validation or subsequent improved methods rather than the more energy-consuming proof-of-work validation.

It is essential that we take steps to ensure that any cryptocurrency activity, and mining especially, works to advance rather than hinder New York’s ongoing efforts to mitigate climate change. The City is at an important crossroads where it can use its power as a consumer, investor, and financial capital to become a leading advocate and center for green cryptocurrency. If enacted, the legislation establishing a State-level moratorium on cryptocurrency mining operations that use a proof-of-work method for authentication would provide a two-year window in which the State can evaluate its options, and the City similarly could use this time to focus on and prioritize these important energy and environmental concerns.^[15] Your voice and leadership on this issue are extremely important, and we hope that this letter begins a productive dialogue about how to identify more climate-, environment-, and community-friendly ways for the City to thrive.

Respectfully,

Bethany Davis Noll, Co-Chair
Environmental Law Committee

Justin Gundlach, Co-Chair
Elizabeth Stein, Co-Chair
Energy Committee

Cc:

Hon. Adrienne E. Adams, Speaker, NYC Council
Hon. Amanda Farías, Chair, NYC Council Committee on Economic Development
Hon. James F. Gennaro, Chair, NYC Council Committee on Environmental Protection
Lorraine Grillo, First Deputy Mayor
Hon. Jennifer Gutiérrez, Chair, NYC Council Committee on Technology
Meera Joshi, Deputy Mayor for Operations
Brendan McGuire, Chief Counsel to the Mayor
Maria Torres-Springer, Deputy Mayor for Economic & Workforce Development

*The Environmental Law Committee thanks Committee members Rebecca Bratspies, Ramya Ravishankar, and Michael Wong for their work on this letter. The Energy Law Committee thanks Committee members Peter Funk and Geoffrey Heffernan for their work on this letter.